Ask Me Anything (AMA) with Inman Editor-at-Large and Side Board Member, Clelia Peters

On April 7th, 2020, Clelia Warburg Peters joined us for an informative Ask Me Anything (AMA) livestream. During the broadcast, Alice Pak, Side’s Director of Partnerships, and Peters discussed all things COVID-19. Topics ran the gamut from lessons learned from past market shifts to potential positive outcomes in a post-pandemic world. Here are the highlights.


As the President of Warburg Realty, one of the oldest (founded in 1896) and most well-respected brokerages in the U.S., Peters oversees strategic business development and investing. She’s also the founder of MetaProp, a PropTech accelerator business focused exclusively on real estate technology. Peters, who is now a Venture Partner with Bain Capital Ventures,  was one of Side’s earliest investors. If she looks familiar, you’ve likely seen her hosting an Inman Connect event in New York or Las Vegas. She also serves as Editor-at-Large for Inman.

3 Key Takeaways - A Bullet Point Recap

Here are some of the most poignant observations and pieces of tactical advice that came up during our conversation with Peters.

1 - WHAT’S HAPPENING? There’s no true precedent for this economic pause; we could have a fast V-shaped recovery or a slower U-shaped dredge.

● COVID-19 is truly unprecedented: 
Peters’ dad, the second-generation owner of Warburg Realty, has been through many economic shifts. When asked about how COVID-19 compares, he said, “This doesn’t look like an economic depression; it looks like an alien invasion."

While speculating what to expect during recovery, Peters poses a poignant question; "[Will] we come back and see the market performing similarly to the way that it was performing before? Or are there a number of factors that cause people to behave differently? We've all been hoping for a V-shaped recovery... so we'll reach a bottom, and then we'll go straight back up. More like an economic pause.”

2 - WHAT SHOULD YOU FOCUS ON NOW? Being human above all else, maintaining listing inventory, and shifting to a ‘wartime CEO’ survival mode mentality.

● How to best serve buyers and sellers: 
“Reinforce your humanity. Dial salesmanship down and humanity and connection [up].”

● It’s important to maintain active inventory:  
“Consumers are going to be really forgiving about days on market right now. Traffic to Zillow is down, but the time that people are spending on the site is up. Keeping inventory up there is smart, and I would encourage you to work with your sellers to maintain inventory at this time, in terms of a web visibility presence.”

● Time for a mentality shift:  
“If you're running a team, you need to move into a wartime CEO mentality. A peacetime CEO should focus on delegation and growth, while a wartime CEO needs to be relentlessly focused on survival. You need to hold any marketing dollar you spend to an even more rigorous test of value than normal. There are a number of things that are relatively low cost, but high yield. Social is probably the area of greatest potential right now. Provide information about what's happening in your community and support small businesses. That's meaningful for people right now.”

3 - WHO’S POISED TO WIN? iBuyers and integrated platforms are here to stay; top agents will gain market share and usher in a ‘golden age’; virtual transactions are key to success, with innovative companies like Side are leading the pack.

● iBuyers are here to stay; integrated service platforms will gain popularity: 
Peters explains that iBuyer platforms have completely pulled out of the market right now. “Ironically, this would be a period [when] a lot of people may be interested in selling to an iBuyer. But they don't have the ability to model risk or understand the implications of what's happening, so [these types of platforms] don't work in a market environment like this. [But] we’ll see iBuyers come back; that will continue to be a trend in the market.”

Peters continues, “I also think we're going to see a growing trend of integrated services platforms, and by that, I mean we'll see more and more models where agents are employed and where they engage in the home sales transaction as an integrated transaction model where they're also trained to sell home insurance, mortgage, and title products. Those companies will make their money from aggregating all of those transactions as opposed to focusing on just brokerage.”

● Top agents will gain a larger portion of market share and usher in a ‘golden age’:  
“There are going to be fewer independent contractor agents nationally because of these different trends. But for those who endure, it's going to be a period where people take the agent role more seriously, where there are more and better tools available to agents.”

● Innovate companies like Side are uniquely well-positioned to support top agents through this transition:
“COVID-19 is pushing us to look at what sort of infrastructure and digital systems we have in place. Side is meaningfully outperforming the market overall in terms of transactions that are being closed during this time. That's because Side is the best digital end-to-end platform for transaction management in the business. And Side has always been really focused on ensuring that technology was there. Side agents are going to emerge from this crisis in a better position than virtually any other agents in the country.”

EXCERPTS FROM THE FULL TRANSCRIPT

Lessons Learned from Past Experiences

What’s been learned from prior economic downturns?

“The biggest [lesson] for both brokers and agents is really around resilience and positivity. This is a challenging period for us as an industry...but that doesn’t mean it's a period where it's impossible to get deals done, and it doesn’t mean we’re going to come out on the other side in a position that’s any less strong than where we started a couple of months ago.”
 

Current Trends and Specific Advice for the Future

What can we expect to happen as we come out of this?

“I don't really know, and anybody who tells you they know right now is lying. This is a truly unprecedented situation. But here's what I do know from the analysis and the discussions that I've had. First, in places where sheltering-in-place is being strictly enforced, we are going to see a reduction in transactions taking place.

Based on data that we've seen from Wuhan in China, in places where strict lockdown is enforced, there's a 75-90% reduction in real estate transactions. That's what we see in New York as well. We’ve seen a near total cessation of new closings, and things that closed 30, 60 days ago, we're bumbling through completing now because New York hasn’t been very open to [supporting] digital transaction closure. We’re learning on our feet. In places where [virtual processes] have been supported, we're seeing transactions closing, but we're not seeing as many new transactions originating.” Here are a few other key points Peters made:

● There’s huge geographic variability in outcomes:
“What's happening in California is different from what's happening in Texas, which is different from what's happening in Florida. This is not a one-size-fits-all. Even county to county - what's happening in San Francisco proper is different from what's happening in Marin. So, you have to stay highly local and specific about your experience right now.”

● How we recover will impact home prices: 
“If we see employment return and we see the stock market rebound - I think we’ll see home prices remain relatively consistent, and there's data that supports that.” She goes on to explain that during the SARS pandemic in Hong Kong, housing prices followed the same trajectory they had been on pre-pandemic once lockdown restrictions were lifted.

● The big (currently unanswered) question:
“The question is, [will] we come back and see the market performing similarly to the way that it was performing before? Or are there a number of factors that cause people to behave differently? Does the stock market really change its behavior, and we actually see prices meaningfully change?”

Are there particular industry trends that will dominate discussions after COVID-19?

”We're going to see [COVID-19] accelerate some trends that were already taking place. We've been in a period of meaningful change. There was already a trend where we’re seeing [a rise in] new platforms that serve to ‘disintermediate’ or take the human agent out of some aspect of the transaction. I think we'll continue to see that trend.” As for other industry shifts:

● iBuyers are here to stay; integrated service platforms will gain popularity: 
“Peters explains that iBuyer platforms have completely pulled out of the market right now. “Ironically, this would be a period [when] a lot of people may be interested in selling to an iBuyer. But they don't have the ability to model risk or understand the implications of what's happening, so [these types of platforms] don't work in a market environment like this. [But] we’ll see iBuyers come back; that will continue to be a trend in the market.”

Peters continues, “I also think we're going to see a growing trend of integrated services platforms, and by that, I mean we'll see more and more models where agents are employed and where they engage in the home sales transaction as an integrated transaction model where they're also trained to sell home insurance, mortgage, and title products. Those companies will make their money from aggregating all of those transactions as opposed to focusing on just brokerage.”

● Top agents will gain a larger portion of market share and usher in a ‘golden age’:
“There are going to be fewer independent contractor agents nationally because of these different trends. But for those who endure, it's going to be a period where people take the agent role more seriously, where there are more and better tools available to agents.”

● Side is uniquely well-positioned to support top agents through this transition
“COVID-19 is pushing us to look at what sort of infrastructure and digital systems we have in place. Side is meaningfully outperforming the market overall in terms of transactions that are being closed during this time. That's because Side is the best digital end-to-end platform for transaction management in the business. And Side has always been really focused on ensuring that technology was there. Side agents are going to emerge from this crisis in a better position than virtually any other agents in the country.”

How should agents go about keeping buyers and sellers engaged right now?

● It’s a powerful time to reinforce humanity:
“This is a very human and vulnerable moment for all of us. It's allowed for a different depth of connection, and what I would really encourage people to do is to just show up as a person first. This is a powerful moment to reach out to check in on people, to do things like to shoot an email, or even to write a note. Dial the salesmanship down and humanity and connection [up] in content you’re putting out on social media. You can do that by sharing about your own experiences and ways that are vulnerable or real, showcasing people in your community, or providing resources [that] support others who might be harder hit by what's happening right now.”

● How agents can support active sellers:
“Encourage sellers to leave their listings online. Consumers are going to be really forgiving about days on market right now. Traffic to Zillow is down, but the time that people are spending on the site is up. You may have fewer looky-loos and more people who are really thinking this is going to be a moment of opportunity. Keeping inventory up there is smart, and I would encourage you to work with your sellers to maintain inventory at this time, in terms of a web visibility presence.”

● How agents can support active buyers (with virtual home tours): 
“The purchase of a home is such an intimate experience that most people will not purchase a home or even an investment property based purely on virtual tours. With that said, many people will shorten a list or rule properties out based on a virtual tour. Over the course of the next year or so, during a period where we will continue to have some degree of social distancing in our minds, VR being used as an initial screening tool may become the norm.” 

As for hosting virtual open houses, Peters encourages agents to test various tools and to practice, practice, practice. She says, “This is new to all of us; investing time upfront in controlling as many things as you can is valuable. But I also think that this is a moment when we're all in this together, so people also are a lot more sympathetic to you being human and vulnerable.

Also, don't forget to keep your sellers in the loop about all the activity that's taking place. If you do a practice video, send it to your seller and ask them if there's anything they feel like you missed. Communication and connection are everything right now.”

● Low interest rates; compelling, or not so much?
“[There’s a] delta between the stated interest rate and what banks are offering on mortgages because banks are concerned about their own capitalization right now. Banks just aren’t really passing those rates along, and I'm not sure the mortgage rates being offered are enough to motivate an otherwise anxious and uncertain public to take the risk unless they have some other external motivation - an acute need to transact.” She continues to explain that under otherwise normal market conditions, the rates would likely have a larger impact, but there’s too much at stake to make opportunistic purchases a realistic goal for most consumers. 

● Is staging worth the risk?
“I'm a big believer in staging [under normal circumstances], but I question the risks it might create for other people involved and whether it's necessary right now. I think of the health of my community and the ethical questions that my behavior raises as a ‘first screen’ for any decision I make right now.” Whether to stage or not presents a great opportunity for agents to apply that screen on a case-by-case basis. 

How do you recommend agents adjust their business plan and marketing to fit a COVID-19 climate?

Peters says, in general, “Everybody needs to be cautious during this period [as] we're not sure how long it's going to last. If you're running a team, you need to move into a wartime CEO mentality. A peacetime CEO should focus on delegation and growth, while a wartime CEO needs to be relentlessly focused on survival.

You need to hold any marketing dollar you spend to an even more rigorous test of value than normal. Normally, I believe in experimentation and in giving things a little time. I don't think now is the time to do that. Now is the time to really focus on the things that you know are delivering value in this environment, and that's going to vary by team and by agent.

There are a number of things that are relatively low cost, but high yield. Social is probably the area of greatest potential right now. Provide information about what's happening in your community and support small businesses. That's meaningful for people right now.”

What Investors See | Industry Winners vs. Losers

As the founder of MetaProp and a Bain Capital investor, you’ve got a good pulse on the PropTech space. Which businesses do you believe will fall, and who will come out on top?

“I don't have a crystal ball on the long-term winners or losers. If we have a pretty sharp V-shaped recovery, [companies like OpenDoor] will remain well-positioned. But if there's a lot of uncertainty and instability, and it's hard for them to stand their algorithmic assessment of home value back up for a while, that could seriously disable those companies for a while to come.”

When it comes to productivity tools that better enable a virtual workspace, she says, “Any tool that's helping agents engage more digitally right now is a tool that's going to see a bump. So, Zoom is an obvious one. But, for instance, eNotarize is also going through a period of enormous growth, because eNotarization has become a key aspect of a variety of different business processes, but clearly, digital closings. Companies that are really focused on supporting digital transactions are seeing a bump right now.

Warren Buffett said, ‘When the tide goes out, you see who's been swimming without their shorts.’ It's a period that there's going to be even more of a focus on profitability and the kind of robustness of a company's decision making.

There have been a number of new entrants in the market in recent years, who have pursued the ‘growth at all costs’ model. That was a model that was working very well, even six months ago. But already, we've seen a lot of pullback from the venture community; nobody is looking to fund a company right now that’s paying for growth at the cost of margin. That’s going to be painful for companies that have really built their business model on that assumption.”

Are there real estate opportunities for investors right now?

“For savvy, well-capitalized investors, now is a moment when you can probably get in and get a great deal. I’m genuinely not sure if that is going to endure. There's a scenario where we move into more of a genuine recession, and we see prices meaningfully impacted. But there's also a scenario where we don't, and we come back out on the other end of this and prices remain relatively stable in line with where they were in the past. And in that scenario, then the moment to get a deal is actually right now.”

The last word

“Right now, other than employment choices, people are not making radical changes to core aspects of their life. We’re not seeing a bunch of foreclosure sales, and we're not going to for at least the next eight weeks. Moving into the summer, we're going to have a much clearer sense of what the world might look like. We're in the middle of a crisis right now -- we're really in the eye of the storm. It's very hard to see outside of the storm.”

Tremendous thanks to Clelia Warburg Peters for taking the time to sit down and talk through all of this with us. We hope you enjoyed getting to know her and getting her insight on all things COVID-19.

Request a
Consultation